Tornado Boats International v EUIPO - Haygreen (TORNADO) (EU trade mark - Judgment) [2021] EUECJ T-167/20 (12 May 2021)

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(EU trade mark – Invalidity proceedings – Figurative EU mark TORNADO – Absolute ground for invalidity – Bad faith – Article 52(1)(b) of Regulation (EC) No 207/2009 (now Article 59(1)(b) of Regulation (EU) 2017/1001))

Tornado Boats International ApS, established in Lystrup (Denmark), represented by M. Hoffgaard Rasmussen, lawyer,

European Union Intellectual Property Office (EUIPO), represented by A. Folliard-Monguiral and V. Ruzek, acting as Agents,

the other party to the proceedings before the Board of Appeal of EUIPO, intervener before the General Court, being

David Haygreen, residing in Colwyn Bay (United Kingdom), represented by R. Harrison, Solicitor,

ACTION brought against the decision of the First Board of Appeal of EUIPO of 17 January 2020 (Case R 1169/2018-1), relating to proceedings for a declaration of invalidity between Mr Haygreen and Tornado Boats International,

composed of D. Spielmann, President, O. Spineanu-Matei and R. Mastroianni (Rapporteur), Judges,

having regard to the application lodged at the Registry of the General Court on 20 March 2020,

having regard to the response of EUIPO lodged at the Court Registry on 9 June 2020,

having regard to the response of the intervener lodged at the Court Registry on 10 July 2020,

having regard to the fact that no request for a hearing was submitted by the parties within three weeks after service of notification of the close of the written part of the procedure, and having decided to rule on the action without an oral part of the procedure, pursuant to Article 106(3) of the Rules of Procedure of the General Court,

1 On 11 April 1975, the intervener, Mr David Haygreen, created 2001 Diving Ltd, a company incorporated in the United Kingdom, with its registered office in Hull, England (United Kingdom), the main activity of which was the construction and repair of pleasure and sport boats. Over the years, the company changed names several times, becoming David Haygreen & Associates Ltd on 31 December 1981, Tornado Inflatable Boats Ltd on 8 August 1985, Tornado Boats Ltd on 6 June 1995 and, finally, Tornado Boats International Ltd on 26 June 1995. The latter company was dissolved on 31 May 2011.

2 In 2006, A, a co-director of and shareholder in the applicant, Tornado Boats International ApS, contacted the intervener and visited his boatyard in the United Kingdom, with the intention of expanding the company’s sales of rigid-hull inflatable boats (‘inflatable boats’) in Denmark. In February 2007, the applicant began importing and selling boats produced by the intervener.

3 In 2008, the parties met in Denmark, with a view to the applicant taking on the management of the intervener’s business, and continued thereafter to exchange correspondence concerning the goods, price lists, customers and other aspects inherent to that management.

4 On 5 July 2011, the applicant filed an application for registration of an EU trade mark with the European Union Intellectual Property Office (EUIPO) pursuant to Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark (OJ 2009 L 78, p. 1), as amended (replaced by Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (OJ 2017 L 154, p. 1)).

6 The goods in respect of which registration was sought are, following the restriction made in the course of the proceedings before EUIPO, in Class 12 of the Nice Agreement concerning the International Classification of Goods and Service for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended, and correspond to the following description: ‘Boats and vessels’.

7 The trade mark application was published in Community Trade Marks Bulletin No 165/2011 of 1 September 2011.

8 On 25 November 2011, the intervener filed a notice of opposition, pursuant to Article 41 of Regulation No 207/2009 (now Article 46 of Regulation 2017/1001), to the registration of the mark applied for in respect of all of the goods referred to in paragraph 6 above.

9 On 11 January 2012, the intervener created a new company incorporated under UK law, Tornado Boats International Ltd, with its registered office in Wales, the main activity of which was the building of pleasure and sporting boats.

10 On 16 January 2014, the Opposition Division dismissed the opposition in Case B 1930539. On 7 March 2014, the intervener filed a notice of appeal against the decision of the Opposition Division.

11 On 8 May 2015, the Board of Appeal of EUIPO dismissed the appeal in Case R 0676/2014-2 and upheld that decision of the Opposition Division. On 7 October 2015, the contested mark was registered under number 010097368 in respect of the goods referred to in paragraph 6 above.

12 On 25 February 2016, the intervener filed an application for a declaration of invalidity, under Article 52(l)(b) of Regulation No 207/2009 (now Article 59(l)(b) of Regulation 2017/1001), against the contested mark in respect of the aforementioned goods.

13 On 26 April 2018, the Cancellation Division upheld the intervener’s application for a declaration of invalidity on the basis of Article 52(1)(b) of Regulation No 207/2009 and declared the contested mark to be invalid.

14 On 22 June 2018, the applicant filed a notice of appeal with EUIPO, pursuant to Articles 66 to 71 of Regulation No 2017/1001, against the decision of the Cancellation Division.

15 By decision of 17 January 2020 (‘the contested decision’), the First Board of Appeal of EUIPO dismissed the appeal brought by the applicant and upheld the decision of the Cancellation Division, after having recalled and re-examined the evidence produced before the latter by the parties. In particular, it noted that, in 2007, the parties had established a business relationship – the scope and nature of which were in dispute – consisting, in essence, in the import and resale, by the applicant, in Denmark, of rigid-hull inflatable boats under the sign TORNADO, and that that relationship began and was pursued initially on the basis of mutual respect and trust between the parties, with a view to the transfer of the business to the applicant. The Board of Appeal nevertheless stated, first, that taking over or assisting in the management of a company on behalf of someone was not equivalent to taking over the ownership of that company and, second, that an indication of a future intention to transfer a company, business or mark does not mean that any such event actually occurred.

16 According to the Board of Appeal, the applicant disregarded, in particular, the exchange of emails with the intervener during the months of May and June 2011, which reflect the state of mind of both parties when their relationship broke down. It was apparent from that correspondence that (i) the intervener continued to be, at the very least, a controlling force in the relationship with the applicant and that he continued to assert his ownership of the mark, which the applicant appeared in some way to acknowledge and (ii) the parties considered that a sale was necessary in order to transfer the rights to the name ‘tornado’ and the business.

17 Thus the Board of Appeal found that it was clear that the applicant knew that the contested mark was the property of the intervener, and that the trade mark application was filed shortly after that exchange and the breakdown of negotiations between the parties.

18 According to the Board of Appeal, in the absence of agreement on acquisition, there could be no agreement on the transfer of ownership of the mark, since there is no provision for the possibility of a de facto transfer of intellectual property rights in either EU law or UK law, under which written contracts are necessary for the purchase of property and the transfer or licensing of intellectual property rights.

19 Furthermore, first, the Board of Appeal observed that the applicant had failed to offer any evidence of the sales and commercial activity which it claimed to have undertaken under the name ‘tornado’, in Denmark or elsewhere. Second, it found that, contrary to the applicant’s claim, the intervener had not abandoned use of the sign TORNADO after 2005. On the contrary, a number of items on the administrative file examined by the Cancellation Division showed, according to the Board of Appeal, that the intervener had indeed used that name over the period from 2005 to 2011.

20 Thus, the Board of Appeal emphasised the insufficient explanations concerning the reasons that led the applicant to seek the registration of the contested mark, considering that the underlying commercial logic was unclear, other than it being a deliberate intention to place an obstacle in the way of the activities of the intervener as the rightful owner of the sign at issue.

21 Lastly, the Board of Appeal stated that the three factors identified in the case-law of the Court of Justice, regarded as being of particular relevance for the purposes of assessing whether the applicant acted in bad faith, were met in the present case. First, the applicant could not have ignored the fact that the intervener was the proprietor of a sign almost identical to the contested mark. Second, it was clear that the applicant deliberately intended to register the contested mark in order to prevent the intervener from continuing to use it. Third, the applicant itself admitted, in 2011, that the sign TORNADO, which it proposed to purchase, was the property of the intervener. Thus, having regard also to the existence, prior to the filing of the application for registration, of a business relationship between the parties as well the chronology of events, the Board of Appeal concluded that the applicant had acted in bad faith.

25 As a preliminary point, it should be observed that, having regard to the date on which the application for registration at issue was filed, namely 5 July 2011 – which is decisive for the purpose of identifying the applicable substantive law – the facts of the present case are governed by the substantive provisions of Regulation No 207/2009 (see, to that effect, order of 5 October 2004, Alcon v OHIM, C‑192/03 P, EU:C:2004:587, paragraphs 39 and 40, and judgment of 23 April 2020, Gugler France v Gugler and EUIPO, C‑736/18 P, not published, EU:C:2020:308, paragraph 3 and the case-law cited).

26 Next, in the present case, so far as concerns the substantive rules, the references made by the Board of Appeal in the contested decision, and by the parties themselves, to Article 59(1)(b) of Regulation 2017/1001 are to be understood as referring to Article 52(1)(b) of Regulation No 207/2009, the content of which is identical.

27 In support of its action, the applicant raises a single plea in law, alleging infringement of Article 52(1)(b) of Regulation No 207/2009 and composed, in essence, of two parts.

28 In the first and main part, the applicant claims that the rights to the sign TORNADO were de facto transferred to it and that it was therefore the rightful owner of that sign at the time the application for registration was filed.

29 In that connection, relying on the statement given by A and on the email correspondence exchanged with the intervener between 2008 and 2009, the applicant claims that it was agreed that it would take over the intervener’s company, including the rights to the sign TORNADO, and that A was introduced, to the intervener’s distributors and commercial partners, as the new owner of that company. Furthermore, it is claimed that in autumn 2008, the applicant also took over the domain name previously used by the intervener.

30 The fact that the intervener continued to be involved in certain aspects of the business did not mean, according to the applicant, that he remained the owner of that business. It is clear from the aforementioned correspondence that the intervener had stepped back and that any contribution on his part was due solely to his interest in staying on in a mentor role for the business that he had created.

31 According to the applicant, following the conclusion of a verbal agreement, the intervener’s company and all of his rights, including the mark TORNADO, were de facto transferred to the applicant. Moreover, the intervener repeatedly assured the applicant that his word was good, and that is one of the reasons why no written agreement was ever concluded between the parties. The applicant submits that that transfer took place in the autumn of 2008 or, at the latest, in January 2009, at which time the applicant became, and continues to be, the rightful owner of the sign at issue.

32 Furthermore, the applicant argues that verbal agreements are just as binding as written ones, with the result that, even in the absence of a formal contract, the transfer of rights remains valid. It submits that it is, in any event, clear from the case file that the content of the agreement between the parties had, for the most part, already been formalised in writing.

33 According to the applicant, the Board of Appeal therefore wrongly found, first, that having regard to the business relationship between the parties at the time when the trade mark application was filed, any de facto transfer of intellectual property rights was irrelevant in the present case and, second, that in July 2011 – that is, a short time before that filing – the applicant had acknowledged, in an exchange of emails with the intervener, that the latter remained the owner of the name ‘tornado’. The fact that, in that correspondence, the applicant offered the intervener a payment solution for the purchase of the mark does not mean that it took the view that it did not own the sign TORNADO and the business. According to the applicant, this was simply an attempt to find an appropriate solution as quickly as possible and avoid any dispute with the intervener.

34 The applicant claims that the Board of Appeal therefore also wrongly found that, in the light of that correspondence, there was nothing to justify the filing of an application for registration of the contested mark, while omitting to find that the applicant had every right to do so because (i) the company and the name ‘tornado’ had already been transferred to it, notwithstanding the intervener’s attempts to assert otherwise and (ii) even in the absence of any transfer, the intervener had, in any event, no rights to the name ‘tornado’ at the time of that filing.

35 The applicant submits that it had used the name ‘tornado’ for a number of years, without deeming it necessary to seek protection of the trade mark. However, it saw no other way than to do so, once the intervener began to claim ownership of that name.

36 Ultimately, according to the applicant, the rights to the sign TORNADO were de facto transferred to it before the trade mark application was filed, with the result that the disagreement between the parties prior to the filing of that application did not alter that fact.

37 In the second part of the single plea, raised in the alternative, the applicant argues, in essence, that even if it were to be considered that the sign at issue had not been transferred to it, there was neither bad faith on its part nor any infringement of the intervener’s rights, as the latter party held no exclusive rights over that non-registered sign, since he had not used it for several years and had failed to prove continuous and genuine use of that sign over the last five years.

38 In that connection, the applicant submits that the Board of Appeal did not properly consider the format and content of the documents produced by the intervener, or sufficiently assess their evidential value. Thus, none of those documents, taken either individually or together, proves use of the sign TORNADO by the intervener and therefore should not have served as a basis for the contested decision.

39 As regards, more specifically, the contract, dated February 1981, between the intervener and David Haygreen & Associates Ltd, granting the latter a licence for the use of the sign TORNADO, the applicant criticises the Board of Appeal for not doubting the authenticity of that document. It claims that the Board of Appeal failed to note that the document was produced only when it was pointed out that the intervener had not made use of the mark, when it had seemingly existed for several decades. That contract therefore does not establish that the sign at issue was used on behalf of the intervener.

40 The applicant argues that since the intervener failed to prove genuine use of the mark TORNADO during the period from 2006 to 2011, he did not own any rights at the time when the application for registration was filed, and any non-registered rights to the name ‘tornado’ were, in any case, no longer in force. The applicant therefore did not act in bad faith when it filed the application for registration of the contested mark.

41 In the concluding part of the application, the applicant claims, lastly, that the requirements for a finding of bad faith established by the case-law of the Court of Justice are not met in the present case. As regards, first of all, the requirement relating to knowledge of the use of an identical or confusingly similar sign, the applicant maintains that, at the time the application for registration was filed, it had no knowledge of the use of the sign TORNADO by the intervener, who had stepped back and was no longer actively involved in the business. As regards, next, the requirement inherent to its intention when filing that application for registration, the applicant maintains that, given that the sign at issue had been transferred to it and that the intervener had not used the sign for six years, there could not have been any dishonest intention on its part in seeking registration thereof. Lastly, as regards the requirement relating to the degree of protection enjoyed by the sign owned by the applicant for a declaration of invalidity, the applicant submits that the intervener’s non-registered rights were no longer in force at the time the trade mark application was filed.

43 It should be noted, first of all, that the EU trade mark registration system is based on the ‘first-to-file’ principle, laid down in Article 8(2) of Regulation 207/2009 (now Article 8(2) of Regulation 2017/1001). Under that principle, a sign may be registered as an EU trade mark only in so far as this is not precluded by an earlier mark, whether that be an EU trade mark, a trade mark registered in a Member State or by the Benelux Office for Intellectual Property, a trade mark registered under international arrangements which have effect in a Member State, or a trade mark registered under international arrangements which have effect within the European Union. On the other hand, without prejudice to the possible application of Article 8(4) of Regulation No 207/2009 (now Article 8(4) of Regulation 2017/1001), the mere use by a third party of a non-registered mark does not preclude an identical or similar mark from being registered as an EU trade mark for identical or similar goods or services (judgment of 14 February 2019, Mouldpro v EUIPO – Wenz Kunststoff (MOULDPRO), T‑796/17, not published, EU:T:2019:88, paragraph 77 and the case-law cited).

44 The application of that principle is qualified, inter alia, by Article 52(1)(b) of Regulation No 207/2009, under which an EU trade mark must be declared invalid, in particular, on application to EUIPO, where the applicant was acting in bad faith when he filed the application for registration of the trade mark. It is for the applicant for a declaration of invalidity who intends to rely on that ground to establish the circumstances which make it possible to conclude that the proprietor of an EU trade mark was acting in bad faith when he filed the application for registration of that mark (see, to that effect, judgments of 8 March 2017, Biernacka-Hoba v EUIPO – Formata Bogusław Hoba (Formata), T‑23/16, not published, EU:T:2017:149, paragraph 45 and the case-law cited, and of 29 June 2017, Cipriani v EUIPO – Hotel Cipriani (CIPRIANI), T‑343/14, EU:T:2017:458, paragraph 24 and the case-law cited).

45 Where a concept set out in Regulation No 207/2009 is not defined by that regulation, its meaning and scope must be determined by considering its usual meaning in everyday language, whilst also taking into account the context in which it occurs and the objectives pursued by that regulation. That applies to the concept of ‘bad faith’ referred to in Article 52(1)(b) of Regulation No 207/2009, in the absence of any definition of that concept by the EU legislature (see, to that effect, judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraphs 43 and 44 and the case-law cited).

46 In that connection, the Court of Justice has held that in addition to the fact that, in accordance with its usual meaning in everyday language, the concept of ‘bad faith’ presupposes the presence of a dishonest state of mind or intention, regard must be had, for the purposes of interpreting that concept, to the specific context of trade mark law, which is that of the course of trade. The rules on the EU trade mark are aimed, in particular, at contributing to the system of undistorted competition in the European Union, in which each undertaking must, in order to attract and retain customers through the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin (see judgment of 29 January 2020, Sky and Others, C‑371/18, EU:C:2020:45, paragraph 74 and the case-law cited; see also, to that effect, judgment of 28 October 2020, Target Ventures Group v EUIPO – Target Partners (TARGET VENTURES), T‑273/19, EU:T:2020:510, paragraph 25).

47 Thus, the absolute ground for invalidity referred to in Article 52(1)(b) of Regulation No 207/2009 applies where it is apparent from relevant and consistent indicia that the proprietor of an EU trade mark has filed the application for registration of that mark not with the aim of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark, in particular the essential function of indicating origin recalled paragraph 46 above (see, to that effect, judgment of 29 January 2020, Sky and Others, C‑371/18, EU:C:2020:45, paragraph 75 and the case-law cited).

48 The intention of an applicant for a trade mark is a subjective factor which must, however, be determined objectively by the competent administrative or judicial authorities. Consequently, any claim of bad faith must be the subject of an overall assessment, taking into account all the factual circumstances relevant to the particular case. It is only in that manner that a claim of bad faith can be assessed objectively (see judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraph 47 and the case-law cited).

49 It is clear from the case-law that, in the case of an application for a declaration of invalidity based on Article 52(1)(b) of Regulation No 207/2009, there is no requirement whatsoever that the applicant for that declaration be the proprietor of an earlier mark for identical or similar goods or services (judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraph 53; see also, to that effect, judgment of 28 October 2020, TARGET VENTURES, T‑273/19, EU:T:2020:510, paragraph 30).

50 It must be added that where it is established that use by a third party of an identical or similar sign for identical or similar goods or services existed and was capable of causing confusion, it is necessary to examine, in the context of the overall assessment of the relevant circumstances of the particular case, whether the applicant for the contested mark had knowledge of this. That factor is, however, only one relevant factor among others to be taken into consideration. Thus other factual circumstances may, depending on the circumstances, constitute relevant and consistent indicia establishing the bad faith of the applicant (see, to that effect, judgment of 12 September 2019, Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO, C‑104/18 P, EU:C:2019:724, paragraphs 55 and 56).

51 In the context of the overall analysis undertaken pursuant to Article 52(1)(b) of Regulation No 207/2009, account may also be taken of the origin of the contested sign and its use since its creation, the commercial logic underlying the filing of the application for registration of that sign as an EU trade mark, and the chronology of events leading up to that filing (see judgments of 26 February 2015, Pangyrus v OHIM – RSVP Design (COLOURBLIND), T‑257/11, not published, EU:T:2015:115, paragraph 68 and the case-law cited, and of 14 May 2019, Moreira v EUIPO – Da Silva Santos Júnior (NEYMAR), T‑795/17, not published, EU:T:2019:329, paragraph 20 and the case-law cited). Similarly, the existence of a business relationship between the parties may also provide indicia for the assessment of bad faith (see, to that effect, judgments of 11 July 2013, SA.PAR. v OHIM – Salini Costruttori (GRUPPO SALINI), T‑321/10, EU:T:2013:372, paragraph 28, and of 12 July 2019, Café del Mar and Others v EUIPO – Guiral Broto (C del M), T‑774/17, not published, EU:T:2019:535, paragraph 31).

52 It is, in particular, in the light of the foregoing considerations that the lawfulness of the contested decision must be reviewed, in so far as the Board of Appeal concluded that there was bad faith on the part of the applicant when it filed the application for registration of the contested mark.

53 In the first and main part of the single plea in law, the applicant claims, in essence, that it could not have acted in bad faith at the time of filing, as it was the rightful owner of the sign TORNADO, which had been de facto transferred to it, at the latest, in January 2009, and that the disagreement, in that connection, between the parties just before the trade mark application could not alter that fact.

54 As a preliminary point, it should be noted that it is common ground that the alleged bad faith must be shown to have existed at the time when the application for registration of the contested mark was filed, namely on 5 July 2011 (‘the relevant date’).

55 It is also common ground, as the Board of Appeal observes in paragraphs 44 to 48 of the contested decision, that (i) the intervener had created the non-registered word sign TORNADO, (ii) he was the proprietor of that sign, (iii) he had sold inflatable boats under the name ‘tornado’ and (iv) from 2007 onwards, he had a commercial relationship, based on verbal agreements, with the applicant, consisting in the import and sale in Denmark by the latter of those boats and the use of the sign TORNADO as a trade mark to that end. In the context of that relationship – which continued for a time, at the very least until 2009, properly and equably – the transfer of the business, including the rights to that trade mark, to the applicant was envisaged.

56 However, the parties disagree as to whether that transfer took place de facto, as the applicant claims, relying, inter alia, on the statements of A and B, who was a business partner of the intervener, and on the email correspondence exchanged between the parties between 2008 and 2009 (see, in particular, paragraphs 47 to 49 of the contested decision).

57 The correspondence referred to in paragraph 56 above is not capable of demonstrating, as the applicant claims, that A took over, on the latter’s behalf, the full management of the intervener’s business as the new proprietor, but rather, at most, as EUIPO rightly observes, that he was between 2008 and 2009 the manager of an unusual form of business partnership between the applicant and the intervener, which cannot imply the acquisition by the applicant of the rights to the sign.

58 Thus, having examined the conflicting statements of A, for the applicant, and of the intervener, the Board of Appeal rightly took into account, in paragraphs 54 to 59 of the contested decision, the email correspondence which the parties exchanged between May and June 2011, namely just before the relevant date, as it demonstrated, first, their state of mind just prior to the final breakdown of their relationship and, second, the need – acknowledged by both parties – to reach an agreement on the transfer of the intervener’s business and trade mark as well as the value thereof.

59 As EUIPO observes, it is apparent from that correspondence that no agreement was materially concluded on the transfer of that intellectual property to the applicant, as is demonstrated, in particular, by the emails which C, A’s spouse and co-director of the applicant, acting on behalf of the latter, sent to the intervener on 24 May and 2, 6 and 21 June 2011.

60 More specifically, in the first place, in the email of 24 May 2011 (see paragraph 54, second indent, of the contested decision), sent in reply to an email of 17 May 2011 from the intervener, in which the latter complained, in particular, that he had not received any payment further to the sales made by the applicant, C replied the following:

‘We need to find an agreement to what this company was/is worth and how we are to pay for it and also how to pass over the ownership of the old Tornado.’

61 In the second place, in the email dated 2 June 2011 (see paragraph 56, first indent, of the contested decision), C, after briefly summarising the applicant’s ‘performances’ over the three previous years, wrote to the intervener in the following terms:

‘We need to figure out an agreement of how much the brand is worth no matter which solution/contract we end up with. The value must be the starting point of any discussion. What would you say that the brand is worth?’

62 In the third place, in the email dated 16 June 2011, having stated that she would be happy to give him money for the trade mark and that it was difficult to evaluate, C set out a fairly detailed proposal for the purchase of the trade mark over ten years, paying a fixed sum every month, which would increase if turnover exceeded EUR 1 million.

63 In the fourth place, in the email dated 21 June 2011, which is included in the administrative file before EUIPO, C explicitly acknowledged that royalties for use of that sign had been paid to the intervener, and also accepted that the parties had never agreed a contract, with the result that the applicant did not know what was to be paid and when it would own the trade mark and that, if the relationship were to end, the applicant would have to ‘start from scratch’.

64 Thus, it is apparent from that correspondence, first, that the intervener regarded himself as the owner of the asset represented by the sign at issue, the use of which by the applicant, as has been pointed out, presupposed the payment of royalties and, second, that the applicant continued, in essence, to recognise the intervener as the owner of that asset, with the result that the applicant was using the sign TORNADO only with the intervener’s consent.

65 In that connection, it should be noted, as the Board of Appeal points out in paragraph 55 of the contested decision, that the intervener continued to be a controlling force in the applicant’s activity concerning the sign at issue, as is demonstrated by the fact that its managers replied, without raising the slightest objection, to the intervener’s question regarding the retail prices of boats that the applicant applied on the market and the profit margins that it gained therefrom.

66 The Board of Appeal therefore rightly observes, in paragraph 60 of the contested decision, that it was clear from the email exchanges between the intervener and C that offers were made by the applicant to purchase the mark and the business, although no price could be agreed, and that the applicant was aware that that mark was the property of the intervener.

67 In those circumstances, contrary to the applicant’s claims, the filing of the application for registration of the contested mark can in no way be regarded as the last chance for the applicant to protect its rights in the face of the intervener’s alleged claims of ownership over the name ‘tornado’. As to the argument that that offer to purchase was made by the applicant with a view to finding an appropriate solution and avoid a dispute with the intervener, this is neither supported nor credible, having regard to the context in which that purchase was proposed and, above all, the tenor of the assertions contained in the aforementioned emails.

68 Consequently, the Board of Appeal did not err in finding that, notwithstanding the fact that the intervener consented in November 2008 to the use of the sign TORNADO as a trading name by the applicant and that it was envisaged that the business would be transferred to the applicant, the negotiations had broken down and that there was no evidence demonstrating that the transfer of the business, including that of the sign at issue, actually took place.

69 From the point of view of the chronology of events, it must also be observed that registration of the contested mark was applied for, as the Board of Appeal notes in paragraph 61 of the contested decision, just a few days after the exchange of correspondence showing that the business relationship between the parties had been strained for some time and had suddenly deteriorated to such an extent that the intervener, in his emails of 15 and 23 June 2011, threatened to break off relations definitively, by instructing the applicant to cease sales and marketing under the name ‘tornado’ and to close the website down.

70 It is clear from that chronology and the correspondence referred to in paragraph 58 above that, on account of the relationship between the parties, which was ongoing at the relevant date, the applicant, contrary to its claims, could not be in any doubt as to the fact that the intervener had abandoned neither his business nor his rights to the intellectual property at issue, and that the applicant continued to use the sign TORNADO by virtue of the consent given by the intervener and in exchange for the payment of royalties to the latter.

71 Moreover, it must be observed that, rather than continue to seek a commercial solution with the intervener, as C, on behalf of the applicant, had envisaged, most recently, in her email of 23 June 2011, the applicant acted without informing the intervener of its intention to file the application for registration of the contested mark, with the result that that application could be regarded as a ‘concealed act’ seeking, first, to evade its obligations to pay royalties and, second, to prevent the intervener from continuing to make use of that sign (see, to that effect, judgment of 5 May 2017, PayPal v EUIPO – Hub Culture (VENMO), T‑132/16, not published, EU:T:2017:316, paragraph 62 and the case-law cited).

72 As EUIPO observes, that analysis is confirmed, furthermore, by the sending, on 21 February 2019, of a cease-and-desist letter addressed, by the applicant’s legal advisers, to a company in which the intervener held shares and which sold inflatable boats under the name ‘tornado’, ordering it, in particular, to cease all sales of those goods.

73 Consequently, the Board of Appeal did not err in its overall analysis – carried out, in particular, in the light of the case-law principles recalled in paragraph 51 above – when it considered, in paragraphs 69 and 70 of the contested decision, that (i) the applicant was fully aware that it did not own the mark TORNADO as the intervener had not transferred it to the applicant, and it nevertheless decided to apply to register that mark, essentially in order to put up obstacles to the intervener’s activities by preventing him from using that mark which, over time, he had made popular in the inflatable boats sector, and (ii) the applicant’s explanations were insufficient to justify the application for registration of the contested mark.

74 In the light of all the foregoing considerations, it must be concluded, as EUIPO does, that the applicant’s argument that it could not have acted in bad faith at the time when the application for registration of the contested mark was filed as it owned the sign TORNADO, is not supported by the evidence it has produced. That evidence does not constitute evidence demonstrating, or from which it could be objectively inferred, that the intervener had transferred the intellectual property rights in the sign in question to the applicant, and that the latter was the owner of those rights on the relevant date. Consequently, it must also be found that the Board of Appeal did not err in concluding that, in the light of the circumstances of the present case, in applying for registration of the contested mark, the applicant’s conduct departed from accepted principles of ethical behaviour or honest commercial and business practices with the intention of undermining the interests of third parties (see, to that effect, judgment of 14 May 2019, NEYMAR, T‑795/17, not published, EU:T:2019:329, paragraph 23 and the case-law cited).

75 The first part of the single plea raised by the applicant must therefore be rejected.

76 In the second part of the single plea, raised in the alternative, the applicant claims, in essence, that it could not have acted in bad faith at the time of the application for the trade mark, as the intervener no longer held any rights to the sign TORNADO, since he had not registered it, had no longer used it for years and had also failed to prove continuous genuine use of that sign from 2006 to 2011.

77 In that regard, it should be noted that, as stated in the case-law recalled in paragraph 49 above and also highlighted by EUIPO, it is not required, in order for an application for a declaration of invalidity based on Article 52(1)(b) of Regulation No 207/2009 to succeed, that the applicant be the proprietor of a registered earlier trade mark.

78 Furthermore, contrary to the applicant’s claims, there is no provision in Regulation No 207/2009 requiring that the applicant for a declaration of invalidity of an EU trade mark under Article 52(1)(b) of that regulation prove genuine use of his or her non-registered mark during a period of five years. The intervener was therefore not required to prove genuine use of his non-registered mark TORNADO from 2006 to 2011 in order to seek a declaration of invalidity of the contested mark.

79 In the present case, it is common ground that the intervener himself used the sign TORNADO from the time when he created it, and it is clear from paragraphs 60 to 63 above that the applicant used it with the consent of the intervener, who continued to own that sign (see paragraphs 62 to 65 and 70 above), which use included the payment of royalties to the intervener. Even assuming that the intervener no longer used that sign for the purposes of marketing inflatable boats with his own company, the fact remains that that sign remained his, as he had consented to the use thereof by the applicant, in exchange for royalties paid by the latter, during the period preceding the application for the trade mark.

80 The second part of the single plea must therefore be rejected, and the action dismissed in its entirety.

81 Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

82 Since the applicant has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by EUIPO, in accordance with the form of order sought by the latter. Since the intervener has not applied for the applicant to be ordered to pay the costs, he must bear his own costs.

2. Orders Tornado Boats International ApS to bear its own costs and to pay those incurred by the European Union Intellectual Property Office (EUIPO);

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Tornado Boats International v EUIPO - Haygreen (TORNADO) (EU trade mark - Judgment) [2021] EUECJ T-167/20 (12 May 2021) URL: http://www.bailii.org/eu/cases/EUECJ/2021/T16720.html Cite as: [2021] EUECJ T-167/20, ECLI:EU:T:2021:257, EU:T:2021:257

Court of Justice of the European Communities (including Court of First Instance Decisions)